Covington Group Closed Largest Single Logistics Deal Ever in the Inland Empire

The Covington Group has acquired a seven-property logistics portfolio for an undisclosed amount. The 3.4 million-square-foot property is located at the Southern California Logistics Centre in the Inland Empire. Covington partnered with an institutional investor on the transaction. The deal is the largest single-transaction to ever trade in the Inland Empire. Pricing information was not disclosed.

The Southern California Logistics Centre is a redevelopment of the George Air Force Base in Victorville, and has been ongoing for 20 years. Once complete, the property will be a fully-integrated multimodal transportation hub generating jobs and commerce for the entire region, according to Covington.

The property also feature an airport, which is expected to attract demand from both logistics and distribution users as well as manufacturing users in the Greater L.A. area in need of space. The new 20 million square foot Southern California Logistics Airport in Victorville, which is currently under construction, could become a hub for manufacturing users—both driving occupancy at the project and at a more affordable price for manufacturing users.

All seven buildings are state-of-the-art class-A properties with 32-foot clear heights, concrete-tilt construction, large functional truck courts and an abundance of trailer parking. The buildings were constructed between 2008 and 2017, and are currently leased to Newell Brands, M&M Mars, Boeing, and Plastipak Packaging, among others. Covington expects that it will continue to capture overflow demand from the Los Angeles area, where rents are higher and there is limited availability of quality space.

While this is the largest transaction in the region, the Inland Empire is an active market, and there have been a handful of notable deals this year. In September, the Rockefeller Group has sold the Harvill Logistics Center, a 300,000-square-foot industrial facility in Riverside County, for $57.5 million to a partnership between CH Realty Partners LLC and Blumenfeld Development Group. Rockefeller built the property last year.

The market is also poised for strong rent growth. In July, a report from Yardi Matrix found that industrial rent growth has surged while vacancies plunged over the past year in coastal markets, with the Inland Empire and Los Angeles leading the way. Fueled by record activity at the Port of Los Angeles, demand for industrial space is at an all-time high in Southern California, according to a new report from Yardi Matrix. The Inland Empire saw rent grow by 7.1% over the last 12 months, while LA posted an increase of 6.7% over the same period.